Defining Business Acumen
Thom: Almost a decade ago, I interviewed for my first human resources business partner role. In my interview, I was asked this question: “How would you rate your business acumen, and how do you plan to apply it to this role?” After spending hours preparing for this interview, I was ready to answer questions on advising managers on recruiting, employee relations, compensation practices and talent development. I hadn’t thought about business acumen. Not surprisingly, I didn’t get that job.
Fast forward to the present and studying to take my insurance licensing test. My 10-year old came downstairs and said, “Hey mom, why are you studying this when you don’t sell insurance?”
What was missing from my answer 10 years ago was an understanding of why business acumen matters. Business acumen is defined as keenness and quickness in understanding and dealing with a “business situation” in a manner that is likely to lead to a good outcome. In a study on Business Acumen and Strategy Execution by the Economist Intelligence Unit, “65% of surveyed leaders agreed that insufficient business acumen limits their organization’s ability to realize strategic goals to a strong intent.”
McDaid: Business acumen doesn’t just mean “having a head for business.” It is the ability to use experience, knowledge, perspective and awareness to make sound business decisions. When business acumen is well-developed, you can make better decisions because you have better judgement. You think strategically about your ecosystem and can leverage this information for success both today and in the future.
Broker Business Acumen Improves Client Service
Thom: After nearly 20 years working in roles involving employee experience, my success or failure at effectively influencing people strategy is my understanding of the industry. It’s a key piece of the puzzle in any role, at any level of an organization.
Our stakeholders in business need us not only to deliver what we sell but also to bring forward business solutions with effective business acumen.
Here are some questions to ask yourself if you want to determine whether you are consistently demonstrating business acumen to your clients to deliver a value-added consultative experience.
- Do you understand the key financial drivers for their line of business?
- What are the organization’s growth goals for the next five years?
- How do the risk management decisions the company makes impact whether or not the company meets those goals?
- What are the key obstacles in the market to achieving their revenue goals?
McDaid: Here are just a few tasks that strong business acumen will allow a sales professional to perform:
- Plan and execute customized engagement strategies based on specific business context
- Build trust because of the strong understanding of the customer’s business priorities
- Obtain important information quickly by knowing the right questions to ask
- Identify challenges, problems and pain points
- Have relevant, insightful and meaningful business conversations
- Act as a true collaborative partner when building solutions to pain points
Without business acumen, it is more difficult for sales professionals to keep their pipeline filled, because they lack the knowledge needed to discuss trends and issues facing prospects. It becomes more difficult to keep the conversation moving forward and the prospect moving through the funnel. With customer-centricity becoming the predominant factor on the emerging business landscape, business acumen becomes as important as sales acumen.
David Fisher, a speaker, coach and author, offers in a Hubspot post another interesting perspective on why business acumen is important to sales. In the past, producers were “lone wolves.” They hunted alone, bringing home their kill and tossing it over the fence for the service folks to handle. However, the interconnectedness of business today invalidates that model.
To be truly effective, producers need to operate within the big picture of their firms. They need to have impact today and consider how what they do can benefit their organization in the future. Business acumen will allow them to do this. It will allow them to become better internal collaborators because they understand how what they do has an impact on other departments within the firm. Strong business acumen allows sales professionals to see the interconnectedness of all the departments and the impact their piece of business has on everyone.
Thom is vice president of human resources for the Harry A. Koch Co. email@example.com
McDaid is The Council’s SVP of Leadership and Management Resources. firstname.lastname@example.org